If distortions in the labour market lead to inefficiently high unemployment, and policy makers cannot enter into a … may exist in public unemployment insurance policy. I study a model in which trade unions, who set wages, interact with a … policy maker, who decides on the level of unemployment benefits and taxes. The policy maker is assumed to have the same …

We calibrate an infinite-horizon model with endogenous growth and unemployment on actual data from the largest … taxes when financed either raising capital taxation or reducing unemployment subsidies. We find two main results: (i) with … lump-sum transfers, reducing labor taxes and unemployment subsidies is beneficial to both employment and growth, while …